The new law will require nearly 200,000 California companies with 15 or more employees to disclose pay starting next year.
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It’ll be the largest state where job-applicant pay information will be mandated by law.
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California’s new law and a trove of online company pay information are pushing corporate America to consider posting salary ranges on job listings even when it’s not required.
Companies elsewhere can accept—or bristle at—the readily available and sometimes inaccurate pay data available online to potential applicants willing to invest a few minutes with a search engine or on sites such as
Indeed recently started including pay estimates on job listings for large companies if exact information is missing. Its figures are generated based on data that both employers and employees provide to the website.
“There are so many pressures that the law is almost becoming the least of the pressures around transparency,” said Christine Hendrickson, vice president of strategic initiatives at Syndio, a technology firm that works with companies to identify pay gaps.
California follows Colorado, Washington state, New York City, and some smaller municipalities in the effort to make pay between men and women, and Whites and minorities, more equitable. A similar bill passed in New York (S. 9427A) and awaits Gov.
Women earn about 83 cents to a man’s dollar, according to US Census figures. Black women are paid about 58 cents for every dollar a White man earns.
The private sector has its reasons for wanting to keep pay a secret, like a desire to avoid wage discrimination lawsuits. Public salaries also can create a disincentive to ambitious workers who want to be paid more for their hard work and experience, the California Chamber of Commerce argued in a letter requesting that Newsom (D) veto the bill.
“It’s not always the right approach,” Elena Simintzi, an associate professor of finance at the University of North Carolina’s Kenan-Flagler Business School, said of posting pay on job listings. While Simintzi supports transparency efforts, she said firms may face criticism for offering higher wages in costly areas, or in a labor market with few qualified candidates.
A recent survey of 388 company executives found a majority plan to or are considering disclosing pay range details in job postings regardless of whether a municipality requires it.
“Momentum for pay transparency laws has only increased with advocacy for pay equity for women and minorities in the workplace—and we expect that to continue in other places,” Anne Dana, a partner with King & Spalding LLP’s Global Human Capital & Compliance practice in New York, said in an email.
While several state have pay transparency laws in effect, the level of disclosure varies.
In some states like Connecticut, Nevada, and Rhode Island, managers must tell applicants what the position pays during the hiring process. In Maryland, the job seeker can ask for a position’s pay scale. Other states bar employers from asking workers what they made at their past job.
California’s new law also will require companies with 100 or more employees, about 20,000 firms, to report to the state the mean and median pay of their employees by race and gender, as well as contractor salaries.